China Resources Land (CR Land) has reported its worst interim profit drop on record, as the torpor in the nation’s housing market translated to shaved bottom lines for the largest property developers.
Net profit fell 25 per cent in the first six months to a six-year low of 10.25 billion yuan (US$1.44 billion), missing the analysts’ consensus forecast compiled by Bloomberg. The decline was the biggest percentage drop since the Shenzhen-based developer went public in 1996.
Sales rose 8.3 per cent to 59.13 billion yuan, the developer said in a filing to the Hong Kong stock exchange on Tuesday. Interim gross profit fell to 17.63 billion yuan, while the gross profit margin was trimmed by 3.4 percentage points to 22.3 per cent, the filing showed.
China’s fifth-largest developer sold fewer homes in the first half, finding buyers for 124.7 billion yuan of property, 26.7 per cent lower than the same period last year.
“The real estate market showed signs of moderate recovery, but overall it was still in an adjustment cycle, with reduced demand,” CR Land’s chairman Li Xin said in the statement. “Faced with the current market environment, the group actively responded to risks and challenges, balancing development and security, and steadily promoted various quality enhancement and efficiency improvement management initiatives, thereby leading to a steady overall performance in the first half of the year.”
The developer declared an interim dividend of 0.2 yuan per share.
CR Land was hardly alone in China’s property slump. Longfor Group, which was founded in Chongqing three decades ago, reported a 28-per cent decline in its first-half core profit last week, as its earnings were weighed down by plunging sales and crimped margins.
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Boom, bust and borrow: Has China’s housing market tanked?
Boom, bust and borrow: Has China’s housing market tanked?
China’s property sector has been beset by woes since 2020, when Beijing introduced the “three red lines” policy to restrict developers’ borrowing binge.
Despite Beijing’s announcement in May of a historic 300-billion-yuan fund for buying housing inventories and reviving the sector, the slow progress in the implementation of the scheme has failed to lift home sales.
Transacted sales generated by the top 100 Chinese developers shrank 39.5 per cent to 1.85 trillion yuan for the first six months of this year, according to China Real Estate Information Corporation (CRIC). In July, sales fell 36.4 per cent from June to 279 billion yuan, CRIC data showed.